Correlation Between Collins Foods and Bilibili

Can any of the company-specific risk be diversified away by investing in both Collins Foods and Bilibili at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Collins Foods and Bilibili into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Collins Foods Limited and Bilibili, you can compare the effects of market volatilities on Collins Foods and Bilibili and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Collins Foods with a short position of Bilibili. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Bilibili.

Diversification Opportunities for Collins Foods and Bilibili

0.53

Correlation Coefficient

Collins Foods  Bilibili

Very weak diversification

The 3 months correlation between Collins and Bilibili is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods Limited and Bilibili in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilibili and Collins Foods is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Collins Foods Limited are associated (or correlated) with Bilibili. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilibili has no effect on the direction of Collins Foods i.e., Collins Foods and Bilibili go up and down completely randomly.

Pair Corralation between Collins Foods and Bilibili

Assuming the 90 days horizon Collins Foods is expected to generate 10.45 times less return on investment than Bilibili. But when comparing it to its historical volatility, Collins Foods Limited is 2.88 times less risky than Bilibili. It trades about 0.03 of its potential returns per unit of risk. Bilibili is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,380  in Bilibili on September 12, 2024 and sell it today you would earn a total of  430.00  from holding Bilibili or generate 31.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Collins Foods Limited  vs.  Bilibili

Collins Foods Limited

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Collins Foods Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Collins Foods is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Bilibili

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bilibili are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, Bilibili reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Collins Foods and Bilibili

The main advantage of trading using opposite Collins Foods and Bilibili positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Bilibili can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bilibili will offset losses from the drop in Bilibili's long position.

The idea behind Collins Foods Limited and Bilibili pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.